Fourth Circuit Issues Split Decision Enforcing Subpoena Against Foreign Company
In a controversial ruling Thursday in a case of first impression, the Fourth Circuit upheld a subpoena against a foreign company that has no U.S. employees, locations, or business activities, compelling the company to produce a witness to testify at a Rule 30(b)(6) deposition. The subpoena was issued pursuant to 35 U.S.C. 24, which permits a subpoena of a witness "residing or being within" the district. The case is Rosenruist-Gestao v. Virgin Enterprises Ltd., and the decision drew an exceedingly lengthy dissent from Judge Wilkinson, longer than the majority's decision.
The case concerns a challenge to a foreign company's registration of a trademark. The foreign company (defendant) refused to appear voluntarily for a Rule 30(b)(6) deposition, so the plaintiff sought a subpoena from the district court under 35 U.S.C. 24, which says that, where testimony is to be taken in a contested case before the Patent and Trademark Office (PTO), the district court clerk "shall, upon the application of any party thereto, issue a subpoena for any witness residing or being within such district, commanding him to appear and testify . . . ."
In this case, the Fourth Circuit majority held that the subpoena must be enforced.
First, the majority held that the statutory issue wasn't properly before the Court because, even though the district court's judgment favored the defendant by refusing to enforce the subpoena, the defendant didn't cross-appeal the district court's earlier conclusion that 35 U.S.C. 24 permitted the subpoena. As Judge Wilkinson complained in dissent, this holding seems to ignore the fact that an appellate court sits to review judgments, not the reasons underlying the judgments.
Second, after concluding that the issue wasn't properly before it, the majority dropped a footnote of what appears to be dicta, adding this single conclusory sentence: "Were the issue before us, however, we would conclude that [defendant's] activities in this case were sufficient to qualify it as 'being within [the] district.'" It's unclear what activities the majority was referring to. It could be the simply fact that the defendant sought to register a trademark. For the only contacts the defendant had with the district, it appears, are the de minimis contacts from the act of filing for trademark registration.
Judge Wilkinson's dissent began with this introduction (citations omitted): "In a first for any federal court, my colleagues hold that a foreign company that has no United States employees, locations, or business activities must produce a designee to testify at a deposition in the Eastern District of Virginia so long as it has applied for trademark registration with a government office located there. As a result, foreign witnesses can be compelled to travel to the United States and give in-person deposition testimony at the behest of any litigant in a trademark dispute, 'for use in any contested case in the Patent and Trademark Office' (“PTO”)-though the PTO's own procedures call for obtaining testimony from foreign companies through other means. The majority's holding that this subpoena is enforceable is problematic for many reasons. It fails to properly apply the statute, 35 U.S.C. § 24, that is directly relevant to its decision, and it reaches a result that is bound to embroil foreign trademark applicants in lengthy, procedurally complex proceedings. It inverts longstanding canons of construction that seek to protect against international discord, and it disregards the views of the PTO whose proceedings 35 U.S.C. § 24 is designed to aid. . . . [T]he majority creates a standard that is in fact a national one: the PTO is located in the Eastern District of Virginia; applications for trademark registration are filed there; and subpoena enforcement will frequently be sought in that district. Indeed, for any foreign corporation without a pre-existing United States presence, the majority's decision will be controlling."
Judge Wilkinson concluded that the majority decision risks international discord and tension "by enabling litigants to compel in-person depositions from foreign companies with the most minimal U .S. contacts, as a condition of those companies obtaining a legal protection that is critical to international commerce." He worries that the majority's decision invites retaliatory actions by foreign nations: "[T]he new burden that the majority places upon foreign companies to give in-person depositions in our country simply because they filed for registration of their trademark . . . risks just such retributive measures. It is simply unrealistic to suppose that other nations will sit quietly while their own companies and citizens are subjected to depositions in this country. It is thoroughly realistic to anticipate their imposing corresponding burdens and inconveniences upon Americans who seek trademark protection for their own activities abroad."
The case concerns a challenge to a foreign company's registration of a trademark. The foreign company (defendant) refused to appear voluntarily for a Rule 30(b)(6) deposition, so the plaintiff sought a subpoena from the district court under 35 U.S.C. 24, which says that, where testimony is to be taken in a contested case before the Patent and Trademark Office (PTO), the district court clerk "shall, upon the application of any party thereto, issue a subpoena for any witness residing or being within such district, commanding him to appear and testify . . . ."
In this case, the Fourth Circuit majority held that the subpoena must be enforced.
First, the majority held that the statutory issue wasn't properly before the Court because, even though the district court's judgment favored the defendant by refusing to enforce the subpoena, the defendant didn't cross-appeal the district court's earlier conclusion that 35 U.S.C. 24 permitted the subpoena. As Judge Wilkinson complained in dissent, this holding seems to ignore the fact that an appellate court sits to review judgments, not the reasons underlying the judgments.
Second, after concluding that the issue wasn't properly before it, the majority dropped a footnote of what appears to be dicta, adding this single conclusory sentence: "Were the issue before us, however, we would conclude that [defendant's] activities in this case were sufficient to qualify it as 'being within [the] district.'" It's unclear what activities the majority was referring to. It could be the simply fact that the defendant sought to register a trademark. For the only contacts the defendant had with the district, it appears, are the de minimis contacts from the act of filing for trademark registration.
Judge Wilkinson's dissent began with this introduction (citations omitted): "In a first for any federal court, my colleagues hold that a foreign company that has no United States employees, locations, or business activities must produce a designee to testify at a deposition in the Eastern District of Virginia so long as it has applied for trademark registration with a government office located there. As a result, foreign witnesses can be compelled to travel to the United States and give in-person deposition testimony at the behest of any litigant in a trademark dispute, 'for use in any contested case in the Patent and Trademark Office' (“PTO”)-though the PTO's own procedures call for obtaining testimony from foreign companies through other means. The majority's holding that this subpoena is enforceable is problematic for many reasons. It fails to properly apply the statute, 35 U.S.C. § 24, that is directly relevant to its decision, and it reaches a result that is bound to embroil foreign trademark applicants in lengthy, procedurally complex proceedings. It inverts longstanding canons of construction that seek to protect against international discord, and it disregards the views of the PTO whose proceedings 35 U.S.C. § 24 is designed to aid. . . . [T]he majority creates a standard that is in fact a national one: the PTO is located in the Eastern District of Virginia; applications for trademark registration are filed there; and subpoena enforcement will frequently be sought in that district. Indeed, for any foreign corporation without a pre-existing United States presence, the majority's decision will be controlling."
Judge Wilkinson concluded that the majority decision risks international discord and tension "by enabling litigants to compel in-person depositions from foreign companies with the most minimal U .S. contacts, as a condition of those companies obtaining a legal protection that is critical to international commerce." He worries that the majority's decision invites retaliatory actions by foreign nations: "[T]he new burden that the majority places upon foreign companies to give in-person depositions in our country simply because they filed for registration of their trademark . . . risks just such retributive measures. It is simply unrealistic to suppose that other nations will sit quietly while their own companies and citizens are subjected to depositions in this country. It is thoroughly realistic to anticipate their imposing corresponding burdens and inconveniences upon Americans who seek trademark protection for their own activities abroad."
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